Linn Group Morning Corn Comment

CHICAGO - Oct 8/08 - SNS -- Following is the morning corn futures comment from the futures commission brokerage firm Linn Group.

It sounds like a broken record, but the corn market slid lower again on
Tuesday on little fundamental data and more concern about the global markets
and a reduction in demand.  The corn market was trading unchanged, slightly
lower most of the day on a pretty quiet day before the corn market ran into
selling late in the day, as usual, and closed lower.  The attempts to rally
after the big break we have seen over the last 7-10 days as been dismal and
maybe is showing us, just how bad the grain markets are right now.  We have
felt that if the demand for US grains is decreasing more than any decrease
in production, the fundamental production data doesn’t matter.  This has to
the first time in my memory that traders/analysts haven’t been talking about
yields this fall.  Everybody is waiting for the USDA report on Friday, but
maybe it doesn’t matter.  We are seeing some commercial pricing, but more
and more, the big guys are waiting to see if the market can put in a bottom
and until that happens, they will be buying their needs as they go along.
The average analysts guess said the October report should be about the same
as the September report for yields and production, but we will be looking to
see if the USDA makes changes to exports, ethanol and feed residual.  That
will probably be the most important part of the USDA report.  The volume
yesterday was good at 250,000 and funds were sellers of 5,000+ contracts.

Overnight, it was a pretty wild night compared to what we have seen the last
couple of days.  The corn market opened lower which was expected, but it did
recover and traded 8-10 higher before selling off the rest of the night and
making new lows in the last hour of trading this morning.  The December
contract closed down 5 cents, but that was 20 cents off the lows.  There is
a lot going on in the outside markets, but I think this just shows that any
attempt to rally the grain markets will be met with active selling.  The
soybean market was up over 60 cents last night at one point, but closed up
only 3 cents.  After the grains closed this morning, the FED announced a ½
pt reduction in rates which led the stock market higher for about 30 min
before it sold off.  The market sentiment seems negative and you can’t fight
city hall.  You have to ask yourself, what news could rally the grain
markets right now.  Is a surprise much lower yield going to rally grains and
if it does, will it hold?  I don’t know, but it seems like every grain
trader/analyst I talk to is watching the outside markets as much as the
grain markets.  The corn market should open lower this morning and then we
will see if we get further liquidation or short covering.  My guess is that
nobody is going to cover their shorts until tomorrow or if the market can
sustain a rally.

Globex Overnight

Contract            Last      Net Change       High      Low      Volume

ZCZ8                 412^0    -5^0                  432^4    407^4    15050

ZCH9                429^6    -3^6                  449^0    424^2    2012

ZCK9                438^6    -6^6                  460^0    436^4    482

ZCN9                448^4    -7^6                  471^0    448^4    992

Early Opening Calls: 2-3 cents better

Top News

-- Brazil's Corn output in 08/09 is expected range between 55.0 - 55.9 mln
mt, down from 07/08 crop of 58.6 mln mt.  The area planted will likely be
14.4-14.6 mln ha, slightly less than the 14.7 mln ha in 07/08

-- France's ONIGC sees 08/09 Corn production at 14.336 mln mt down slightly
from the prior year's 14.355 mln mt. Ending stocks of Corn in France in
08/09 are estimated by ONIGC at 2.183 mln mt up from 2.140 in 07/08.

-- Israel bought 20,000 mt. EU Corn for Dec.-- Dalian May Corn futures
gained 12 Yuan to settle at 1,663 Yuan/mt, other contract months were higher
also

-- Liffe Nov corn futures were off 2.75 euro at 128.25 euros/mt.

-- Globex Corn Vol: 227,273; Pit Vol.: 18,006; Open Interest change: - 4,095

-- Weather: 6-10 Day Forecast:  Normal to Above Temps. Normal to Above
Precip. The eastern Corn Belt will see showers ending later today.  Thursday
into Sunday looks dry. Showers move west to east Monday and Tuesday.  Temps
normal to above.

-- Outside markets: Energy Complex -2.14 at $87.90; Gold & Silver: +26.3 at
$905.2 & +0.579 at $11.953; US $ is trading slightly lower vs. Yen & Euro.

Cash Markets

-- CIF Corn  up 3 to 6. Oct. +58 to +60, Nov. +57 to +60, Dec. +56 to +60,
Jan. +43 to +45 Feb. +44 to +??, Mar. +44 to +??

TREND:

The lack of any positive reaction to leaving the limit down closes on Monday
led to weakness late in the day. Wheat and beans certainly continued to gain
on corn but none of the markets were very impressive. Still very oversold
and due a bounce but it better be more impressive tomorrow or we start
another leg down?

I suspect we do try to rally again?



If you have any questions or want to discuss specific trade recommendations,
contact me directly.

Jim Riley
Linn Group
877-787-6278
jriley@linngroup.com
www.linngroup.com/

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